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TRICON RESTAURANT
INTERNATIONAL
GLOBALIZATION RE-EXAMIN
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Tricon Global Restaurants
Headquarter in LouisvilleWorlds largest ensemble of fast food restaurants: KFC, i!!a Hut, a
"ell
#$un off from e$siCo in %&''
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T(e Fast Food Restaurant
Revenues of Fast Food industr) *orld*ide *ere estimated at +%- %&&.
/# *as accounted for over -0 of global fast food sales
#ales *ere increasing at about 10 onl) in /#
Level of local c(ains internationali!ation *as quite limited
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T(e #u$$l) #ide
/niformit) in offerings at ever) outlet in t(e c(ain23n average, 4-56-0 of store revenues *ere accounted for ra* mate
for labor, and 4157-0 for rent and utilities2
Rental costs varied considerabl)2
#ignificant semi5variable and fi8ed costs made volume a 9e) to $ro
Franc(ising *as $rominent in fast food2
Largest fast food c(ains relied on a mi8 of franc(ised and com$an)
units for t(eir o$erations2
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T(e emand #ide
Consumer s$ending on fast food *as increasing ra$idl)2Customers *ere attracted to*ards ;merican st)le and e8$erience af
/# fast food c(ains2
Customi!ation of $roduct lines *as essential given variations in loc
Consistenc) and standardi!ation limited abilit) of international c(a
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Ke) Conce$ts = Com$etitors
Four categories are accounted for t(e bul9 of mar9et:"urgers
i!!a
C(ic9en
>e8ican food
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"urgers
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"urgers
"urgers com$rised more t(an one5t(ird of total fast food industr)2Leader in "urgers is >conalds Cor$oration founded in %&11 b) R
conalds total ca$ital e8$enditures *ere earmar9ed outsi
in %&&.2
>conalds international o$erations accounted for 6&0 of com$an)
and 1'0 of its $rofits2
>conalds tried to ac(ieve consistenc) of e8$erience in 9e) $roce
; ma?or milestone *as a franc(isees innovation of "ig >ac in %&
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i!!a
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i!!a
i!!as com$rised of about %10 of total fast food industr), second largest after bi!!a mar9et *as muc( less concentrated t(an burger mar9et2
Ca$ital requirements *ere lo* in $i!!a business2
;lmost +7--,--- *ere required for a $i!!a $arlor and +%1-,---54--,--- for del
business2
T(e leader in $i!!a mar9et is i!!a Hut, o$ened b) an and Fran9 Carne) in %&Wic(ita, Kansas2
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C(ic9en
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C(ic9en
C(ic9en *as less /#5dominated and more internationali!ed2KFC accounted for 110 of mar9et, follo*ed b) o$5e)e *it( .0, and C(urc
02
Leader in quic9 service c(ic9en, KFC, *as o$ened in %&7& b) Colonel Harla
#andars in Corbin, Kentuc9)2
KFC (ad more t(an 1-- units in %&&2
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>e8ican Food
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>e8ican Food
>e8ican quic95service restaurant industr) *as estimated for 10 of mar9et2
ioneer *as Taco "ell, accounting '70 of mar9et s(are2
Taco "ell *as started b) Glen "ell in o*ne), California in %&42
eal2
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Tricon Global Restaurants =Trico
Restaurants
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Histor)
e$siCos restaurant businesses (ad not been successful2Customers s*itc(ed to Coca5cola from e$si2
T(ere *as minimal coordination in o$erations across different coun
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T(e #$in5off
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3$erations
3$erational im$rovement $rogram: CH;># A Cleanliness, Hos$i;ccurac), >aintenance, roduct qualit), and #$eed of service2
>)ster) s(o$$ing $rogram began in %&&2
CH;># also created a standard librar) for o$erating manuals *(i
consisted of four volume set: management, service, $roduct, and equ
;llo*ances (ad to be made for different tastes2
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>ar9eting
"efore s$in5off, t(ere (ad been a lac9 of standardi!ation and s(ared $r
bet*een brands2
#et standards and determined best $ractices2
W(ite $a$er
;nimated colonels *it( voice5overs
Local budgets su$$orted local mar9eting cam$aigns2
Buarterl) brand board meeting *as attended b) all mar9eting manage
s(aring best $ractices2
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Human Resources
TR< ado$ted a restaurant5focused culture2
Tricon em$(asi!ed o*ners(i$ and recognition to a greater e8tent t(an >conals b) encouraging
management to o*n com$an) stoc92
Recruiting and turn5over in ever) countr) *as focused2
evelo$ing countries (ad lo*er turn5over t(an /#2
TR< succeeded in filling its $osition *it(in its ran9s .-5&-0 of time2
m$(asis on local management de$t( made it difficult to move talent across borders2
T(ere *ere onl) %%-5%4- e8$atriates *it(in t(e organi!ation2
Com$ensation and qualit) of life c(allenges furt(er com$ilcated cross5border mobilit)2
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Finance
;llocation of funds across m)riad demands *as t(e main focus2
ac( countr) unit *as evaluated ever) t*o )ears2
#ome as$ects of financing *ere standardi!ed across countries, some varie
countr)2
ealing *it( currenc) fluctuations and determining countr) ris9 $remia *
biggest c(allenges2
Level of so$(istication of financial intermediaries *as im$roved2
Ta8ation issues *ere not standard across countries2
Ca$ital *as raised in /# *it( domestic ban9s in different countries2
#ome franc(isees *ere listed on domestic stoc9 e8c(ange2
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Franc(ising
TR< (ad o$ened franc(ise su$$ort centers in allas, London, and #*(ic( dealt *it( substantial international (eterogeneit) in franc(isi
arrangement2
T(e su$$ort t(at t(e franc(isor $rovided could be different from /#
;sian franc(isees (ad been more inde$endent t(an t(e ones in /#2
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roduct evelo$ment
roduct develo$ment (ad been bundled into R= and Bualit) ;ssude$artment *(ic( reflected t(at it (ad failed to come u$ *it( ne* $
Tricon s$ent almost +4- million )earl) on R=2
T(e resources t(at Tricon did not s$end on *ere earmar9ed for
roduct evelo$ment outside t(e /# *as com$arativel) limited2
TR< made some attem$ts to ta$ into franc(isees ideas about $roduc
innovation2
TR< $roduct develo$ment for KFC (ad been centrali!ed in ;sia2
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Com$arative Cost #tructures for #ele
Fast Food Categories
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>ar9et Dic(es
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>conalds #elected Financial ata
million
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>conalds
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Tricon Global Restaurants #elect
Financial ata E+ million
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Tricon 3rgani!ational #tructur
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Tricons Goals For T(e Future
"ecome reno*ned for an o*ners(i$ and recognition culture t(at deriv
results in t(e industr)2
rive su$erior same store gro*t( t(roug( differentiated brand $osition
innovation2